Posts with tag: housing crisis

Shortage of Affordable Homes Causes 50% Fall in Young Homeowners

Published On: September 25, 2015 at 3:54 pm

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The amount of homeowners in England and Wales has fallen by almost 250,000 over the last five years, according to recent Government figures.

Since 2010, the level of homeownership has dropped from 67.4% of all households to 63.3%. At the same time, the number of families living in the private rental sector has risen by 2.5m.

The decrease in homeownership arrives despite several Government schemes aimed at helping young people get onto the property ladder. Through the latest initiative, under-35s can buy a new home with a 5% deposit.

However, research compiled by the Labour Party, before its annual conference in Brighton, indicates that under the coalition government, there was a 50% decline in the amount of young people owning a

Shortage of Affordable Homes Causes 50% Fall in Young Homeowners

Shortage of Affordable Homes Causes 50% Fall in Young Homeowners

home.

The study, using official Government data, found that just 800,000 people under the age of 34 now own a house, half of those that had their own home in 2010. The average deposit needed to buy a property is now £57,000, up from £43,000 five years ago.

Meanwhile, private sector rents have hit a record high. The average rental property now costs £803 per month, a 20% rise on 2010. Annually, rents cost £1,636 more a year than in 2010.

Labour will focus on housing in its first conference since the general election.

The party’s new leader, Jeremy Corbyn, has called for rent controls to be introduced, and the issue could be put to vote after an emergency motion was selected for debate.

In an interview ahead of the conference, Corbyn stated: “My view is the Government should introduce rent regulation.”

He added that until this happens, the benefit cap should not be cut: “The amount of money saved in the overall budget from the household benefit cap is actually quite small.”1

Corbyn has given the role of shadow housing minister to John Healey, who will take a full seat in the shadow cabinet.

Healey claims that for the past five years, the Conservatives have blamed Labour for the shortage of housing, but this will “no longer wash”.

He reports that the Government have built too few affordable homes, while also failing in their pledge to deliver one-for-one replacements for properties sold through the Right to Buy scheme.

He continues: “There’s so much more ministers could be doing to ensure more people are decently housed and to help the next generation get on.

“Millions of people are now struggling with the cost of the housing crisis – higher rents, more homelessness, the lowest rate of homeownership in a generation, and fewer homes built than at any time since the 1920s. Their inaction is indefensible. There can, and must, be change.”1

A Department for Communities and Local Government spokesperson responds: “The 2008 economic crash devastated the house building industry, leading to the lowest levels of starts for any peacetime year since the 1920s.

“We have got Britain building again, with housing completions at their highest annual level, and nearly 800,000 homes built, since 2009.

“We are also planning to build 200,000 starter homes across the country, which will enable young first time buyers to buy a home at a 20% discount.”1 

1 http://www.independent.co.uk/news/uk/politics/lack-of-affordable-housing-blamed-for-50-drop-in-young-homeowners-10515982.html

Housing supply falls to 11 year low

Published On: September 24, 2015 at 11:27 am

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A new report suggests that the number of properties available to purchase per estate agent branch dipped to an eleven-year low during August.

Data from the latest report by the National Association of Estate Agents shows that supply of available housing dropped by one-third in the last month, with 38 properties available, in comparison to 55 in July.

Drop

This was the lowest level of housing supply recorded since January 2004, when 38 properties were also available per branch.

August also saw a fall in the number of house hunters, with an average of 408 house-hunters registered per member-branch, in comparison to 462 in July. This was a drop of 12%.[1]

The number of completions in August rose by one to hit an average of ten properties per branch. However, sales made to first-time buyers dipped to their lowest level since July last year. 20% of sales were made to first-time buyers in August, down from 23% in July and 24% in June. This indicates that movement I the market is happening further up the property ladder, with second and third time movers cranking up sales.[1]

Housing supply falls to 11 year low

Housing supply falls to 11 year low

Crisis point

‘We’ve been banging the drum about the dwindling supply of housing for a while and this month’s report reiterates what we’ve been saying-there simply aren’t enough houses to match demand and we’re reaching crisis point,’ said Mark Hayward, managing director of the National Association of Estate Agents.[1]

‘There are now eleven house hunters fighting after every available house which isn’t sustainable. First time buyers are finding themselves being squeezed out of the competition, which of course means it’s taking young buyers longer to get their foot on the first step of the ladder, which will in turn increase pressure on the rental market,’ Mr Hayward concluded.[1]

[1] http://www.propertyreporter.co.uk/property/housing-supply-dr0ps-to-11-year-low.html

 

Former Energy Secretary Calls Right to Buy Extension ‘Mugabe Politics’

Published On: September 23, 2015 at 4:32 pm

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One of David Cameron’s former cabinet ministers has described the Right to Buy scheme extension as Robert Mugabe politics.

Ed Davey, an ex-Liberal Democrat MP who was Energy Secretary in the 2010 coalition cabinet, criticised the proposal, which will force housing associations to sell off homes.

Former Energy Secretary Calls Right to Buy Extension 'Mugabe Politics'

Former Energy Secretary Calls Right to Buy Extension ‘Mugabe Politics’

At the Lib Dem conference in Bournemouth, Davey said: “The Tory policy of selling housing associations is Mugabe. That’s not acceptable, it’s shameful.”1

Housing associations are private, not-for-profit landlords that manage social housing. The organisations house people off the social housing waiting list, but also let properties on the open market.

Opponents have said it is wrong to force the private organisations to sell their homes at a discount.

Last week, David Cameron wrongly said housing associations are “part of the public sector”1.

Housing associations borrow against the value of future homes to fund building projects, and they insist the extension will affect their ability to raise finances and build new properties. Some claim they will challenge the scheme in the courts if plans go ahead.

In April, the Institute for Fiscal Studies states that the extension will likely cause higher Government debt and result in fewer homes being built.

It said: “Given this uncertainty, and the coalition’s less-than-impressive record in delivering replacement social housing under the existing Right to Buy, there is a risk that these policies will lead to a further depletion of the social housing stock – something the proposal explicitly seeks to avoid.”1

Right to Buy was launched in the 1980s as a way of making homeownership more widely available.

However, many homes bought through the scheme have ended up being let back to tenants by the private landlords that purchased them.

Figures from August reveal that private landlords are now renting out almost 40% of properties sold through the scheme. Additionally, just one in ten homes sold under Right to Buy are actually being replaced, despite the Government vowing to replace the houses one-for-one.

The Government insists that the policy gives more people the opportunity to own their own homes.

1 http://www.independent.co.uk/news/uk/politics/right-to-buy-extension-is-politics-of-mugabe-says-one-of-david-camerons-former-ministers-10513217.html

FCA Says it’s Not Policy to Get Older People to Move Home

Published On: September 22, 2015 at 1:25 pm

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The Financial Conduct Authority (FCA) has stated that it is not its policy to encourage older people to move home, after a member of its mortgages team said the UK has a “real issue with the last time buyer” at a recent conference.

Lynda Blackwell, from the City regulator, said that the Government’s focus on first time buyers might be misdirected.

She explained: “We’ve got a big supply issue in this country. There’s a lot of questions about whether it is right that the Government should focus on the first time buyer when we’ve got a real issue with the last time buyer.

“There’s older borrowers who basically pay off their mortgage and sit quite happily in a very big house.”1 

Her statement was made during a panel discussion on the housing shortage. It provoked a strong reaction from Saga, which described the comments as unhelpful and insulting.

FCA Says it's Not Policy to Get Older People to Move Home

FCA Says it’s Not Policy to Get Older People to Move Home

An FCA spokesperson said: “These comments, which were made as part of a panel discussion at a trade body event, do not represent FCA policy.

“Last week, we published a range of materials as part of a conference on the mortgage market organised by the FCA. That conference covered a wide range of issues concerning the mortgage market, including older homeowners.”1 

Director of Communications at Saga, which represents older people’s interests, Paul Green, responded to the remarks: “If people have saved and paid for their house over their working lives, it’s down to them if they want to fill it with family or live on their own, but setting the generations against each other or talking about ‘tackling older homeowners’ is not just unhelpful, it’s insulting.”

However, he did acknowledge that looking across the market could help first time buyers.

“First time buyer scheme for the young are a good start, but we need to consider incentives to help encourage those that would like to move, to take that step,” he said. “The FCA are right, we definitely need to do more and do it better, but using divisive language will only alienate the very people we need to help and encourage.”1 

Although the shortage of new homes is the main cause of the affordability crisis, which is pricing first time buyers out of the market, the lack of existing properties being put up for sale is also an issue.

Recent data from the Royal Institution of Chartered Surveyors (RICS) shows that the number of homes for sale is at a record low, contrasting to a rise in the amount of hopeful buyers.

At an event on the London rental sector, Christine Whitehead, Professor of Housing at the London School of Economics, said the ageing population is one of the key issues in the capital’s housing market.

“We are now housing four generations rather than three and we have not addressed that right across the board,” she stated. “The result is that those who have to get into the market are being excluded by people like me who live too long.”1

Chief Economist at the Council of Mortgage Lenders (CML), Bob Pannell, says that the UK has “an ageing population that holds a disproportionately large amount of national housing assets.”

Statistics show that older people are more likely to under-occupy homes, but Pannell adds that they are also often “reluctant or unable to move to homes that might better suit their needs”2.

He adds that encouraging more activity across the whole market could cause better use of existing properties and the marketability of new homes.

A CML spokesperson insists: “No one is suggesting that anyone should be forced to do anything they don’t want to do, however, there may be ways to remove the barriers that people who wish to move face.”1

She says some homeowners who would like to move have found that after Stamp Duty and other costs, they would end up out of pocket by selling up.

Saga’s research reveals that two-thirds of older homeowners would consider moving house for retirement, but they are prevented by the lack of suitable properties or the cost.

1 http://www.theguardian.com/money/2015/sep/18/its-not-policy-to-get-older-people-to-move-house-says-fca

2 http://www.cml.org.uk/news/when-building-more-homes-isnt-enough/

Housing Minister Reveals New House Building Target

Published On: September 21, 2015 at 4:57 pm

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The Government has revealed that it has set a target of building one million homes in England by 2020, as the housing crisis worsens.

The National Housing Federation (NHF) estimated that 974,000 homes were needed between 2011-14. However, data from 326 councils shows that just 457,490 were built.

The Housing Minister, Brandon Lewis, says that the Government aims to create one million new homes during this Parliament, but the Labour Party insists the Conservatives have failed on housing.

The NHF says around 245,000 new homes are needed every year in England.

Director of Policy and External Affairs at the NHF, Gill Payne, explains the need: “In some areas there is a drastic shortage causing prices to soar, putting homes out of the reach of many people.

“Families and young people across the country are crying out for genuinely affordable homes so they can put roots down and achieve their dreams of owning a home.

“Skyrocketing rents and ballooning house prices are eating up more and more of people’s wages and forcing people out of their local communities or into smaller, lower quality housing.

“We haven’t built enough homes in this country for decades, and if the gap between the number of households forming and the number of new homes being built continues to grow, we are in danger of not being able to house our children.”

Several factors have been blamed, from planning procedures being too slow to developers holding large sections of empty landlord, but not building on it.

In 2012, the Government introduced changes to the National Planning Policy Framework, hoping to make the planning process easier and quicker.

In 2014, 240,000 planning applications were given detailed permission, compared to 158,000 in 2011.

However, critics have said the change made it easier for “inappropriate and unwanted”1 developments to progress.

They also believe the rise could be due to low numbers of applications caused by the financial crisis in 2008.

Housing charity Shelter says a shortage of land was the reason for low levels of planning approvals, while others have turned on developers that build slowly.

Property Economist at Capital Economics, Matthew Pointon, explains that by keeping the number of new homes available low, the price of these properties can be set high.

Earlier in the year he said: “By building them more slowly it means they [the developers] can maximise the value of their assets.”2

Other reasons include a shortage of skilled labour, a huge drop in the amount of councils building new homes and regulations limiting housing associations.

Homes of the future

Dr Philip Oldfield and the Sustainable Tall Buildings Design Lab at the University of Nottingham have been working on the types of homes needed to meet housing shortages in the next 40 years.

They have come up with ideas for the new houses we could see in 2050.

They have developed alternative schemes, from vertical villages to flat pack housing.

The university’s Dr Mark Gillott says: “We need the ability to provide housing en masse, there is a huge housing crisis at the moment.”3

Lewis wants to make it “easier” for people to develop, “especially on brownfield sites”.

He adds that further changes to planning rules would form a “principle of development” on brownfield sites, helping councils decide whether or not to grant permission.

The Campaign to Protect Rural England calculates there is enough brownfield land to build 1.8m new homes.

Lewis continues: “Ultimately, it is up to local authorities to look at what their housing needs are and where they feel it is appropriate to build. I trust local people to get that right.”3

He says schemes like Help to Buy, through which the Government helps first time buyers, should give developers the confidence that their homes will be sold.

Payne reports that the NHF would like housing associations to build more.

She says: “Last year, housing associations built 50,000 homes, 40% of all new homes across the country, and they have ambitions to work in partnerships with Government to vastly increase this.”3

John Healey, Labour’s Shadow Housing Minister, adds: “Ministers making big promises about homes in the future won’t wash anymore.

“People have seen five years of failure with Conservatives in charge of housing.”3

1 http://www.bbc.co.uk/news/uk-politics-30489929

2 http://www.bbc.co.uk/news/magazine-30776306

3 http://www.bbc.co.uk/news/uk-england-34209027

Why are Homes so Expensive?

Published On: September 16, 2015 at 3:56 pm

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It is a harsh fact, but many young people today will never own their own home in this country, despite it being the aspiration of most.

Getting onto the property ladder, buying a small house and gradually moving to a nicer area and bigger home is the dream for the majority of people.

In the early 1980s, just half of the population owned their own home. The other half rented – 30% in social housing from their local council and 20% from private landlords.

When Margaret Thatcher introduced Right to Buy, those living in council homes could buy their properties and subsequently saw the value of their discounted purchases increase rapidly. This turned housing into an investment, rather than shelter and a stable lifestyle. However, councils stopped building houses, partly due to financial difficulties, but also because more people were interested in buying than renting.

Since then, we’ve landed in a housing crisis. Houses are now extortionate in many parts of the country and wage growth has not kept pace with inflation, or increased by as much as house prices. The young, suffering the most, have seen their earnings and borrowing allowances hit the hardest.

At the same time, most new private-sector jobs are in London, where house prices have spiralled.

Why are Homes so Expensive?

Why are Homes so Expensive?

In July, the average UK house price was £282,000, according to the Office for National Statistics (ONS). For Londoners, this is measly – the average house price in the capital is currently £525,000.

However, the average UK worker, who earns £24,648 per year, including bonuses, can only afford a house costing £110,000 with a mortgage worth 4.5 times their salary. Finding a job that pays this and a home that costs this little is tough. Add in saving for a deposit while paying market rents, and the task is virtually impossible.

Then there’s the fact that Britain is not building enough homes to meet the demand. This is partly caused by a brick shortage that began before the recession and a lack of skill in the industry. British workers often don’t aspire to be builders and we’re not bringing in skilled workers from abroad.

But throughout this crisis, there are many people that profit from rising house prices. Private companies land bank so that they can hold land and see its price increase; this also pushes up house prices.

The greatest expansion in housing is within the private rental sector, which is the least likely area to increase homeownership in Britain. Young people cannot save enough money for a deposit and the main cause of this is expensive rents.

But if you’re a landlord, keeping people renting is a good thing. Investors can make good profits while expanding their portfolios.

Again, homes are being viewed as investment opportunities, bringing in more investors. There’s a high proportion of new build properties in London that are being bought and left empty, while their values rise and the buyer sits tight. Meanwhile, families wait on housing lists or are forced out of the city.

It is not just the supply and demand problem that’s pushing prices up. When homes are expensive, people will work to keep them expensive. Buy-to-let landlords, with high capital, buy properties and rent them out at high costs and investors buy up land and new build homes in the knowledge that their profits will be higher than any other investment. This is keeping families and individuals priced out of homeownership.

And then there are the regional differences. In England and Wales, the average house costs 8.8 times the average salary. In the City of Westminster, it is 24 times the local salary, compared to 12 times ten years ago. Every part of England and Wales has seen the house price to local salary ratio rise since 2002.

But people want to buy; renting conditions can be poor, but still demand high rents.

A shortage of housing supply is causing panic, with prospective buyers and tenants queuing outside properties and having to make offers that they cannot really afford in order to secure a home.

Prices continuously rise and the landlords owning one in five properties in the UK see their profits soar at the same time. This indicates just how many homes investors own – only 2% of the population are landlords.

Now it’s a case of waiting for the crisis to come to a halt. With high house prices come a whole host of problems – lower birth rates, more people moving abroad and a dampening on the economy, as less people purchase homes.

For prices to come down, someone will have to lose out. Will it be the landlords, or generation rent?